One of the most disappointing events that anyone may experience is being declined for credit at a time when credit is most needed. This is why regular and easy access to consumer credit information is so important for everyone.
According to the 2012 Third Quarter Credit Bureau Monitor report, out of the 19,69-million credit active users in South Africa, only 393 708 credit reports were issued to users for the first nine months in 2012. This amounts to only 0,02 % of credit active users in the country.
“The above statistics demonstrate the lack of consumer awareness around the importance of knowing their credit status. More people need to know about their credit standing so that they are able to make an informed decision when applying for credit,” says Hayden Marimuthu, GM of audit and administration at Xpert Decision Systems (XDS).
The Credit Bureau Monitor report also shows that there were 15 356 disputes about information held in consumer credit records for the quarter ended September 2012. These disputes arise as consumers query inaccuracies in the credit information.
This number of disputes could increase as more individuals access their credit reports and discover that information contained in these reports is inaccurate.
“If you are thinking of opening a new credit account, it makes sense to understand your credit report first and make sure that everything is accurate and up to date. If there is an error, contact the organisation responsible for that report and request to have it corrected,” adds Marimuthu.
“For consumers who are not seeking credit, knowing your credit standing will ensure that you do not become a victim of identity theft, this is because your credit report reflects all your information and you are then able to determine fraudulent activity on your accounts. The credit report can also be used to better manage your responsibilities in terms of credit agreements, accurate payments, and dates of those payments.”
The National Credit Regulator (NCR) has mandated that consumers must be able to access one free credit report per year. A credit report provides a snapshot of a person’s credit accounts, repayment records, and how well they are coping with their finances.
Lenders look at a consumer’s report, along with information on the application form, to decide whether to approve the consumer credit – it must also be noted that over and above a consumer credit information, an affordability assessment is conducted to ensure that if the consumer is approved for credit and they can afford to repay the credit.
A consumer’s affordability and credit standing will also assist lenders in their decision on what interest rates to charge the consumer.
A common misconception exists in that information bureaus decline access to credit. This is not true. Information bureaus do not decide whether someone obtains credit or not. Only credit grantors make lending decisions.
An information bureau simply collects information from credit grantors such as banks, savings and loans institutions, credit unions, finance companies and retailers.
Information bureaus store and aggregate this information in the form of a credit report which gives an overview of how well a consumer is meeting their credit repayment obligations, then provides it to credit grantors when they are assessing an application by a consumer for a new credit account or loan.
Each credit grantor decides what standards the applicant must meet in order to be granted credit. The bureau does not track the decision a grantor makes after ordering a credit report, favourable or not.
“Consumers have the right to access their credit report for free at least once a year, and that consumers are doing themselves a great disservice to themselves by not exercising this right,” Marimuthu concludes.
“The above statistics demonstrate the lack of consumer awareness around the importance of knowing their credit status. More people need to know about their credit standing so that they are able to make an informed decision when applying for credit,” says Hayden Marimuthu, GM of audit and administration at Xpert Decision Systems (XDS).
The Credit Bureau Monitor report also shows that there were 15 356 disputes about information held in consumer credit records for the quarter ended September 2012. These disputes arise as consumers query inaccuracies in the credit information.
This number of disputes could increase as more individuals access their credit reports and discover that information contained in these reports is inaccurate.
“If you are thinking of opening a new credit account, it makes sense to understand your credit report first and make sure that everything is accurate and up to date. If there is an error, contact the organisation responsible for that report and request to have it corrected,” adds Marimuthu.
“For consumers who are not seeking credit, knowing your credit standing will ensure that you do not become a victim of identity theft, this is because your credit report reflects all your information and you are then able to determine fraudulent activity on your accounts. The credit report can also be used to better manage your responsibilities in terms of credit agreements, accurate payments, and dates of those payments.”
The National Credit Regulator (NCR) has mandated that consumers must be able to access one free credit report per year. A credit report provides a snapshot of a person’s credit accounts, repayment records, and how well they are coping with their finances.
Lenders look at a consumer’s report, along with information on the application form, to decide whether to approve the consumer credit – it must also be noted that over and above a consumer credit information, an affordability assessment is conducted to ensure that if the consumer is approved for credit and they can afford to repay the credit.
A consumer’s affordability and credit standing will also assist lenders in their decision on what interest rates to charge the consumer.
A common misconception exists in that information bureaus decline access to credit. This is not true. Information bureaus do not decide whether someone obtains credit or not. Only credit grantors make lending decisions.
An information bureau simply collects information from credit grantors such as banks, savings and loans institutions, credit unions, finance companies and retailers.
Information bureaus store and aggregate this information in the form of a credit report which gives an overview of how well a consumer is meeting their credit repayment obligations, then provides it to credit grantors when they are assessing an application by a consumer for a new credit account or loan.
Each credit grantor decides what standards the applicant must meet in order to be granted credit. The bureau does not track the decision a grantor makes after ordering a credit report, favourable or not.
“Consumers have the right to access their credit report for free at least once a year, and that consumers are doing themselves a great disservice to themselves by not exercising this right,” Marimuthu concludes.